Impact of safety features on car insurance premiums

Car insurance is a must for every car owner in the country—it is not only required by law but also provides car owners with immense peace of mind. However, all that peace comes at a price: a premium. But many aren’t aware that, in addition to coverage, the premium is also affected by the car’s safety features.

Most cars these days are designed to be safe with a strong body and several safety features, all to reduce the risk of accidents and minimise the impact. As for the premium, providers calculate it based on risk. The safer the car, the lower the chances of filing a claim, and the more likely you are to get a discounted premium rate.

In this article, we’ll explore a car’s safety quotient and its impact on the premium. So, let’s get started …

Car insurance premiums in the Philippines

A car insurance premium is the amount paid by car owners to providers in exchange for coverage against accidents, collisions, fire, floods, theft, vandalism, etc. Now, how do insurance providers calculate the premium?

There are several factors that providers consider while determining a car insurance rate. The list includes -

• Driver’s profile, including their age, claim history, and driving record
• Vehicle details, including model, make, and year of manufacturing
• Usage, concerning the frequency of driving & purpose
• Location, area where the car will be parked or where it is most driven to
• Safety features in the vehicle, the more advanced the features, the greater the discount

Also Read: Renewing car insurance in the Philippines: A practical guide

Car safety score and premium rate

Do you know that car insurance companies in the Philippines, when setting premiums, refer to international safety ratings like ASEAN NCAP? The higher a car's score, the lower its premium, because the risk of an accident or collision is significantly reduced. This is why models like the Honda City and the Toyota Vios often enjoy affordable insurance packages.

Standard safety features that can lower insurance costs

Airbags & crash sensors	Airbags are among the most recognised safety features in cars today. When paired with crash sensors, the two significantly minimise injuries during a collision. Their presence is rewarded by lower medical costs and reduced potential claims.
Anti-lock Braking System & Electronic Stability Control	Both ABS and EBD help prevent skidding and maintain vehicle control on slippery roads. Thus, reducing the frequency of accidents and making a car a low-risk asset.
Anti-theft devices & GPS Trackers	In a country where car theft is quite common, GPS trackers and anti-theft devices add a strong layer of protection. Insurers offer discounts of 10% to 20% on cars with such devices.
Seatbelts, pre-tensioners	While seatbelts are standard, pretensioners tighten the belt in the event of an impact, thus offering better protection. Cars with these features are less likely to file injury claims.
Advanced Driver Assistance System (ADAS)	ADAS features such as automatic braking, departure warnings, and adaptive cruise control are common across high-end models. They drastically reduce the risk of accidents or collisions and, therefore, the cost of insurance.

Safety features & premium hike

Is it possible that safety features could increase premium cost? Yes, it is a possibility, let us see how -

You see, while advanced safety systems like ADAS improve safety, if they are damaged, repairs can be costly. For example, replacing a single radar sensor can cost thousands of pesos, thus increasing the potential claim value and leading insurers to raise the premium on this account.

In short, specialised repair requirements can lead to higher claim costs, prompting insurers to adjust premiums accordingly.

Also Read: Understanding Pay-How-You-Drive Insurance in the Philippines

Practical tips to lower insurance premiums via safety

A car owner can leverage safety features for discounts. Here are a few helpful tips -

• Maintain a clean driving record - the fewer the claims, the cheaper the premium.
• Install a certified anti-theft device and inform the insurer.
• Ask the insurer about ‘safe driver discounts’.
• Bundle insurance policies for added savings.
• Opt for a car with a high NCAP rating.
• Make sure to compare quotes from multiple providers.
• Ask for specific discounts concerning safety features.

The future of car safety & insurance

In the future, the automotive industry is expected to see the rise of connected cars, in which data will be transferred seamlessly between vehicles and used by insurance companies to understand your driving patterns better and thus determine your premium.

Furthermore, AI-powered assessment tools will be helpful in the future for analysing driving patterns and accident data. All this will lead to more precise and personalised insurance coverage and pricing.

Also Read: Why should you avoid making small car insurance claims in the Philippines?

Bottom line

What is the impact of safety features on car insurance premiums? It is a question many applicants ask; however, the answer is not that straightforward. It is common for car owners to invest in safety features not only to protect their loved ones but also to save in the long term and lower premiums. Here is what a car owner needs to know -

• Compare policies to find the best insurance that meets the requirements.
• Try to buy a car with numerous safety features—it will not only protect you but also your wallet.
• Anti-theft and crash-prevention systems offer the most savings.
• The more safety features, the greater the chance of premiums reducing significantly.
• High-tech safety features enhance safety, but their repairs can increase the premium cost.
• Telematics and AI shape premium pricing.

 

Also Read: Can AI predict your car’s insurance premium? Let’s find out